Termination of the Promissory Note Debt

A promissory note is a negotiable instrument. It can be used to guarantee payments between individuals or companies. In other words, it is a written document that establishes a right to claim, indicating that the other party owes a debt. Because promissory notes have been used for many years, they are highly reliable.

A promissory note is a legal document and carries significant responsibilities. In case of non-payment, the creditor can resort to legal action. If a promissory note matures and the debt remains unpaid, the creditor can inform a lawyer and refer the debtor to them.

Cancellation of Promissory Note Debt

For a promissory note debt to be cancelled, it must be paid. Unpaid debts will remain and will constantly confront the individual. However, the cancellation of a promissory note in courts can vary depending on the judge's decision. For example, the debt of someone who has gone bankrupt and no longer has the ability to pay, but had a promissory note debt at the time, may be cancelled by a court decision. Or, part of the debt may be cancelled, while the rest must be paid. Furthermore, the debt of individuals whose assets have been seized through enforcement proceedings may be settled through enforcement. However, if the seized assets do not fully cover the debt, the debt is not completely cancelled; only the value of the seized assets is cancelled.

Objection to Promissory Note Debt

In enforcement proceedings based on negotiable instruments, an objection to the debt is the debtor's objection to the payment order for any reason other than the signature. The debtor may object by claiming that they do not owe the debt, that the debt is time-barred, that the debt has been repaid or deferred, or by raising an objection to jurisdiction. If the debtor's objection is justified, the court will decide to accept the objection and the enforcement proceedings will be suspended.

 “…On the other hand, in enforcement courts with limited jurisdiction, in a case of objection to a debt related to a bill of exchange, the non-existence of the debt, or its repayment or deferment, can only be proven with an official document or a document whose signature has been acknowledged; proof by witness statements is not considered.”.

Therefore, the court should have rejected the objection because it could not be proven that the debtor paid the debt forming the basis of the enforcement proceedings pursuant to Article 169/a of the Enforcement and Bankruptcy Law; the judgment rendered in writing is incorrect..." (Supreme Court 12th Civil Chamber, Case No. 2016/30006, Decision No. 2018/3086)

An objection to a signature is when the debtor claims that the signature on the negotiable instrument subject to enforcement proceedings is not theirs. The objection must be clearly stated in the petition. The burden of proof that the signature is not the debtor's rests with the creditor. The enforcement court must conduct a hearing to hear the signature objection. If, as a result of expert examination, it is determined that the signature is not the debtor's, the enforcement proceedings will be suspended.

On the other hand, individuals have the right to object to promissory note debts if they have sufficient and valid legal grounds. Examples of these grounds include:

If the person was intoxicated when signing the promissory note, was experiencing psychological or mental health issues at the time of signing, has severe memory loss to the point of not remembering signing the note, the amount written on the note is excessively high, they were subjected to pressure or threats at the time of signing, or the debt is not cancelled despite payment of the note, these situations may constitute grounds for objection.

For the reasons listed above, debtors can object to the promissory note. They can do this by applying to the court to which they are affiliated and stating their objection. In addition, if there are documents proving payment of the debt, these documents and the names of the individuals involved must be provided. In this way, the objection is valid, but the objection period is 24 hours after learning about the promissory note and being forced to sign it. The objection must be made within this period. Otherwise, the debt is considered accepted and the debtor is obligated to pay.

Statute of Limitations on Promissory Note Debts

Promissory notes are drawn up between two parties. If the debtor fails to pay the note, the other party can initiate proceedings and contact a lawyer to collect the debt . If no action has been taken on a promissory note and it has not been transferred to a lawyer, a calculation can be made based on its due date . For example, if three years have passed since the due date of a promissory note that has expired and no action has been taken on it, the note will automatically lapse, and there will be no further liability. Although the statute of limitations for promissory note debt is stated as 3 years in the Turkish Commercial Code (4 years including 1 year of enforcement proceedings), this period cannot be said to be entirely valid. This is because, in addition to the stated statutes of limitations in promissory notes, there are also clauses that allow for the extension of this statute of limitations.

A promissory note that is more than 3 years past its due date can still be enforced. For example, a creditor can initiate summary enforcement proceedings on a promissory note that is 3 years past its due date. In this case, the debtor must object to the debt within 1 week. Failure to object will be considered acceptance of the debt, and the debtor may be obligated to pay it again if no objection is filed within 1 week.

The statute of limitations is not the same for all promissory notes. For example, promissory notes issued between official institutions or banks have a 10-year statute of limitations. Since these types of notes serve as contracts, their statute of limitations is considered to be exactly 10 years. However, the Commercial Code does not consider the statute of limitations to be 10 years for all promissory notes. For example, the statute of limitations for a promissory note issued in exchange for furniture you purchased from a tradesperson is 3 years. Since these are considered ordinary promissory notes, their statute of limitations is also shorter. The statute of limitations for promissory notes issued in exchange for any purchase from a tradesperson is clearly 3 years.

You can obtain further information on this matter by consulting with our experienced lawyers .

Trainee Lawyer Hüseyin Bayraktar